China responded that day by imposing tariffs on the same amount of US goods, largely targeting soybeans and other agricultural products. In a survey of global fund managers in July by Bank of America Merrill Lynch, 60% of respondents said that a trade war is the biggest threat to financial markets. The United States is far and away the most popular place for such investment, given the size and liquidity of markets for US government debt and policies that are very friendly to foreign investors other financial assets and real estate.
So far, Washington has imposed tariffs on $34 billion worth of Chinese goods, and tariffs on another $16 billion will come at a later point. Beijing responded by imposing similar charges on the same amount of US products. This would put pressure to hike rates in the USA, in particular.
Reacting to media reports that the higher tariffs were coming, Chinese foreign ministry spokesman Geng Shuang warned that Beijing will "definitely fight back" to defend its "lawful rights and interests".
The move comes after talks to avoid an escalation of the trade conflict fizzled out in June and also follows hard on the heels of a 5% fall in the value of the Renmimbi relative to the US Dollar, which was a move that many in the market say had the People's Bank of China written all over.
Global stock markets fell overnight and into the morning session Thursday while oil prices were lower and gold steady.
This is on top of the new tariffs already imposed on $34bn worth of products from China, and an additional $16bn scheduled to go into effect soon.
China's imports from the United States previous year totaled $153.9 billion.
In early July, the USA government imposed 25 per cent tariffs on an initial US$34 billion of Chinese imports.
The highest penalties in Friday's list would hit honey, vegetables, mushrooms and other farm goods, targeting areas that supported Trump in the 2016 election.
U.S. President Donald Trump has proposed raising tariffs to 25% on a range Chinese products including fresh fruit and vegetables, in the latest development of the escalating trade war.
A bit of quick maths reveals that works out to US$50 billion (AU$67 billion) in fees.
China promptly promised it would take countermeasures of its own.
Trump said two weeks ago he is ready to impose tariffs on over $500 billion of Chinese imports. "Second, we suggest the USA return to rationality and not act impulsively, as it will eventually hurt itself".
"We advise the United States to be level-headed and avoid simply acting on impulse, otherwise it will ultimately hurt itself".
President Trump and the European Commission President Jean-Claude Juncker agreed last week to put their tariffs on hold while the two sides negotiate, including on the dispute over steel tariffs, which gives the USA more leverage to pressure China.
Federal funds futures implied traders were pricing in about a 91 per cent chance of a rate rise in September and a 71 per cent chance of an additional hike in December, according to CME Group's FedWatch program.